2023 Solar Incentives Guide for Elmwood Park, NJ - Tax Credits & Rebates

What Solar Tax Credits, Incentives, and Rebates are Available in Elmwood Park?

Source: https://www.dsireusa.org/

The term "solar incentives" broadly refers to financial incentives implemented by the government and by solar companies to encourage people to use renewable energy by making installing and using solar panels more affordable. These incentives could include upfront discounts, cash back or monthly credits towards your utility bill. Some incentives are given by the federal government, some by the state of New Jersey and some by your utility company, county or municipality. Categories of solar incentives include:

• Solar Renewable Energy Certificate (SREC): SRECs and other performance-based incentives are typically handled at the state level. Once your solar system meets a predetermined threshold (generally a small amount of energy production), you can receive SRECs that can then be sold to your utility company or other buyers. The money you make is usually considered part of your taxable income.
• Rebates: Solar companies may help you claim a rebate, or partial refund of your purchase, for your solar panels. Counties or states will also sometimes offer limited-time rebates. The value of a rebate will usually come off your total price before tax credits are calculated.
• Net Metering: Net metering is an incentive you can get once your solar panels are up and running. If you've signed a net metering agreement with your Elmwood Park utility company, the company will subtract the value of the excess energy your solar system produces from your monthly utility bill. In some areas, this is a dollar-for-dollar credit, while in other places you may make back a percentage of the value.
• Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in how much in taxes you owe the federal government.
• Tax Exemptions: These may come in the form of property tax exemptions, which allow you to ignore the value added by your solar panels when paying taxes on your home. You may also qualify for an exemption on sales tax at the time of purchase.

Federal Solar Incentives

When thinking about solar incentives, federal incentives might be the first thing that comes to mind. The solar incentive that you may be most familiar with is the Federal Solar Investment Tax Credit (ITC), which provides a credit on your taxes equal to a percentage of the cost of your solar system.

The ITC originally covered 30% of the total cost of solar system installation, although that number has fluctuated slightly over time between 26-30%. The installation date of your solar system will determine what percentage you qualify for. The total cost of installation includes the panels themselves as well as the cost of accessories, labor and equipment. There is no maximum claim amount. The ITC applies to solar systems installed after January 1, 2006 on your primary or secondary residence. The residence must be in the United States and owned by you.

Reaching out to your local Elmwood Park solar panel installer is the best way to understand how the ITC may apply to your situation.

In August 2022, the Inflation Reduction Act expanded and extended the ITC, now called the Clean Energy Credit. The Clean Energy Credit is valid until 2035. Solar installation projects started after January 1, 2022 and completed by the end of 2032 may qualify for a 30% tax credit; this amount will then decrease slightly on a yearly basis until the current program ends. The expansion also makes credits for energy storage systems even easier to claim, starting in 2023.

Click here to learn more about the new Inflation Reduction Act. Your local Elmwood Park solar panel company can answer your questions and explain how the new Clean Energy Credit will apply to you.

State & Local Solar Incentives

Tax credits, rebates and more might be provided at multiple levels. In addition to federal solar incentives, there are often state and local ones, too. Certain incentives are ongoing, while others are offered for only a limited time. These local incentives might come from your county or municipality, or from the New Jersey government.

Next Steps for Installing Solar in Elmwood Park

Solar energy use nationwide has gone up tremendously in the last 15 years, in part thanks to the growth in the number of solar incentives. You might receive these incentives from the federal government, the New Jersey government or your local utility company. Getting in touch with your local Elmwood Park solar panel installation expert is the best first step towards getting the most money possible when you switch to solar energy.